Mining in Minnesota -- regulation needed

  • Article by: ROLF WESTGARD
  • Updated: June 20, 2013 - 9:10 PM

This is a potentially significant industry for the northeastern part of the state. Regulation is needed, and can succeed.

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The Hibbing Taconite Co. plant is operated by Cliffs Natural Resources Inc. The state’s iron ore industry has benefited from the economy’s comeback.

Photo: Ariana Lindquist, Bloomberg News

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Josephine Marcotty’s June 16 article “Minnesota’s next mining boom” focused on the environment-vs.-economics dispute that hangs over Minnesota’s world-class deposits of copper, nickel, cobalt, gold and platinum group elements.

They lie in a band, meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range. They arrived more than a billion years ago in the magma that featured northern Minnesota’s active volcanic history. They are concentrated out of the magma by liquid sulfur, which acts as a “collector,” because these elements prefer the sulphide liquid to the magma by a factor of 1,000 times more. This process is responsible for forming the world’s economically mineable magmatic nickel-copper sulphide deposits, like those found in Canada, Russia and the United States.

Demand for these elements is soaring. One reason is their use in renewable energy systems that provide transmission, rechargeable batteries and wind turbine technology. An example is the battle between the world’s largest iron ore miner, Vale SA of Brazil, and China’s biggest nickel producer, the Jinchuan Group. They were bidding for control of South Africa’s Metorex Ltd., a medium-sized producer of high-demand nonferrous metals like copper, nickel and cobalt, a contest finally won by Jinchuan. The Metorex resource is dwarfed by Minnesota’s.

This resource has attracted two major mining ventures, including one by Polymet Corp. of Canada that includes Swiss commodity and mining giant Glencore, which now owns 18 percent of Polymet’s shares. Glencore also has Polymet convertible debentures and warrants that would increase its ownership to 25 percent.

The other is Twin Metals, a joint venture that includes Duluth Metals and Antofagasta PLC of Chile, one of the world’s largest copper miners.

A team of geologists at Twin Metals facility in Ely, Minn., estimates that there are 13.7 billion pounds of copper, 4.4 billion pounds of nickel and 21.2 million ounces of palladium, platinum and gold in that venture.

The Polymet project expects annual metal production of 39,000 tons of copper, 9,000 tons of nickel, 400 tons of cobalt, 22,000 ounces of platinum, 87,000 ounces of palladium and 13,800 ounces of gold from its lease.

The state of Minnesota owns more than 6,000 acres in the region, and Minnesota’s schools could collect at least $2 billion in royalties in the coming decades if these new mining projects proceed. This state property is known as “school trust lands.”

Under the Minnesota Constitution, income from such lands is earmarked for the Permanent School Fund, which contributes about $60 per pupil to every school district. An analysis by the Minnesota Department of Natural Resources projected that the school fund, with assets of $720 million, could more than triple in size with these new royalties over 25 to 30 years.

Environmentalists are lined up in opposition to the mining, viewing the projects as a serious threat to water quality in the entire region, including the Boundary Waters. Project advocates include U.S. Sens. Amy Klobuchar and Al Franken and most area mayors who want those new, quality jobs on the depressed Iron Range.

An example of an effective sulfide mine is the smaller Flambeau Mine at Ladysmith, Wis. Kennecott was the operator of this open pit copper sulfide mine that operated 140 feet from the Flambeau River in the 1990s. During the mining operation, all of the surface area drainage and pit pumping water went into a treatment plant that successfully purified the water so it could be safely returned to the environment. Upon closure, to avoid acid rock drainage (ARD), the pit was backfilled with the waste rock and 30,000 tons of limestone. The limestone was added as an ingredient to neutralize any ARD that forms. The Flambeau Mining Co. did not have any violations of its permits in construction, operation and closure. It was closed in 1997.

There is a 714-page draft environmental impact statement (DEIS) from 2009 for the Polymet Project from the Minnesota DNR and the Corps of Engineers. It is clear from the statement that any effluent from the project will end up in the drainage areas of the Partridge and Embarrass Rivers. Those rivers flow south to the St. Louis River and Lake Superior, not north to the Boundary Waters. The DEIS is generally positive about the project, and it suggests that if all of Polymet’s commitments are met, there is no serious impact on the environment. The Environmental Protection Agency disagreed and called the draft statement inadequate. A new statement is expected this summer seeking to address the EPA’s concerns.

One of the issues with these projects is the financial status of the operators. They will have to meet the substantial environmental commitments of the project that are described in the DEIS. There is also the final closure and remediation, which is estimated to cost at least $50 million for each project, and then the long (more than 1,000 years, per the impact statement) follow-up of drainage from leftover tailings and newly created storage ponds.

The financial commitment of the two large participants, Glencore and Antofagasta, must be assured before the dirt begins to fly.

In 2012, world energy demand burned more than 2 tons of coal, oil and natural gas for every person on the planet. This sent more than 30 billion tons of carbon dioxide into the atmosphere. World governments are forcing carbon-free renewable energy programs. This is causing increased demand for nonferrous metals, of which the world now produces just 35 annual pounds per capita. Their price is rising as shortages develop. The pressures for production of these profitable metals from Minnesota’s Copper Range will be difficult to resist. The June 16 article concludes with the quote: “Can you trust them?”

A better question could be: “Can you regulate them?” I suggest that we can.

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Rolf Westgard is a professional member of the Geological Society of America and is adjunct faculty on energy subjects for the University of Minnesota’s Lifelong Learning program. His fall-quarter class is “Minnesota’s Volcanic Geologic History; from Mountain Building to Minerals.”

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